=Tiffany & Co (TIF) reported earnings on Thur 24 August 2017 (b/o)

Tiffany & Co beats by $0.06, beats on revs; reaffirms FY18 guidance

• Reports Q2 (Jul) earnings of $0.92 per share, $0.06 better than the Capital IQ Consensus of $0.86; revenues rose 3.0% year/year to $960 mln vs the $930.19 mln Capital IQ Consensus. 
• Comparable store sales declined 2%.
• Management noted an increase in wholesale sales of diamonds, increased wholesale sales in the Asia-Pacific region and strong e-commerce sales growth. Overall, growth in fashion and designer jewelry sales contrasted with softness in other jewelry categories. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 4% and comparable store sales declined 1% due to the factors noted above.
• In the Americas, total sales rose 1% to $439 million in the quarter and declined 1% to $830 million in the first half; comparable store sales declined 1% and 2%, respectively. In the Asia-Pacific region, total sales of $235 million in the quarter and $492 million in the first half were 2% and 5%, respectively, above the prior year; comparable store sales declined 7% and 5%. Gross margins (gross profit as a percentage of net sales) of 62.3% in the second quarter and 62.2% in the first half were higher than 61.9% and 61.6%, respectively, in the prior year.
• The increases reflected favorable product input costs and a shift in sales mix toward higher-margin jewelry, partly offset by the effect of increased wholesale sales of diamonds.
• Co reaffirms guidancefor FY18, sees EPS of up mid-single digits to ~$3.94, excluding non-recurring items, vs. $3.94 Capital IQ Consensus Estimate. Management's outlook for fiscal 2017 calls for: (i) worldwide net sales increasing over the prior year by a low-single-digit percentage as reported and on a constant-exchange-rate basis, (ii) net earnings per diluted share increasing by a high-single-digit percentage over 2016's earnings per diluted share of $3.55 and by a mid-single-digit-percentage over 2016's earnings per diluted share (excluding charges) of $3.75 and (iii) earnings per diluted share in the second half of fiscal 2017 increasing over the prior year's second half, with the growth occurring in the fourth quarter. These expectations are approximations and are based on the Company's plans and assumptions for the full year, including: (i) worldwide gross retail square footage increasing 2%, net through 10 store openings, seven relocations and seven closings; (ii) operating margin in line with the prior year due to an expected increase in gross margin offset by SG&A expense growth higher than sales growth; (iii) interest and other expenses, net of $35-$40 million; (iv) an effective income tax rate of ~33%; (v) no meaningful effect in fiscal 2017 from the U.S. dollar versus foreign currencies on a year-over-year basis; and (vi) minimal benefit to net earnings per diluted share from share repurchases. Management also expects for fiscal 2017: (i) net cash provided by operating activities of ~$700 million and (ii) free cash flow of ~$450 million.